In United States v. Harra, the Third Circuit dealt with criminal convictions arising out of banking practices in the wake of the “Great Recession” of 2008. Wilmington Trust Corp. had a practice of issuing term loans: the borrower would pay interest only for the term of the loan with a balloon payment at the end of the term. The loans were typically construction loans that would be refinanced prior to the balloon payment, and extensions were commonplace.  The bank did not always categorize loans with past-due principal as past due because extension or refinance applications were often pending. The bank called this its “waiver practice”. But when the recession hit, these “waivers” went from a small fraction of the outstanding principal on the bank’s books to an overwhelming majority. In 2010, the bank changed its practices and basically stopped its “waiver practice”. The practice, though, was not just for internal record keeping. It also framed how the bank reported its balance sheet to the SEC, the Fed and other regulators.  Several bank executives were charged and convicted thereafter with issuing “false statements” in the bank’s regulatory filings. The bank executives challenged the sufficiency of the evidence supporting their convictions, asserting that the Government failed to prove beyond a reasonable doubt that their statements were actually “false”. The Third Circuit vacated the executives’ convictions, holding  “that to prove falsity beyond a reasonable doubt in this situation, the Government must prove either that its interpretation of the reporting requirement is the only objectively reasonable interpretation or that the defendant’s statement was also false under the alternative, objectively reasonable interpretation.”